TAX

ADMINISTRATION

Few State and Local

Governments Publicly

Disclose Delinquent

Taxpayers

United States General Accounting Office

GAO Report to the Joint Committee on

Taxation

August 1999

GAO/GGD-99-165

United States General Accounting Office General Government Division

Washington, D.C. 20548

Page 1 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

B-282522

August 24, 1999

The Honorable Bill Archer

Chairman

The Honorable William V. Roth, Jr.

Vice Chairman

Joint Committee on Taxation

The Internal Revenue Service Restructuring and Reform Act of 1998

required the Joint Committee on Taxation to study whether greater levels

of compliance might be achieved by publicly disclosing taxpayers who

have not filed their required federal tax returns. This report provides the

information about state and local public disclosure programs that you

requested to assist you in your study. Specifically, our objectives were to

determine (1) which state and local governments are operating programs

to publicly disclose the names of taxpayers that are delinquent in paying

the income taxes they owe or do not file income tax returns, (2) the

differences, if any, among these programs, and (3) state and local revenue

office officials’ views on whether their disclosure programs are improving

compliance. Because of your interest in the individual programs, we are

also providing a description of those programs that we identified in

appendix I.

Consistent with your request, in this report we define public disclosure as

a process for proactively publicizing the names and other identifying

information about taxpayers that are delinquent or do not file returns.1

Such programs represent a departure from historical practice. As

described later in this report, federal and state confidentiality statutes

generally prohibit the disclosure of taxpayer information.

Of the state and local governments we surveyed, only four states—

Connecticut, Illinois, Montana, and New Jersey—and the District of

Columbia are operating programs to publicly disclose the names and other

information about individuals or businesses that are delinquent in paying

income taxes. None of the programs include specific provisions for

disclosing the names of taxpayers that simply fail to file their required tax

returns. Instead, compliance employees are to assess taxes owed by

nonfilers they have identified and then process nonfiler accounts in the

 

1

As such, these proactive programs can be distinguished from other disclosures, such as a public notice

pursuant to a legal action (e.g., when a lien is placed on a taxpayer’s property).

Results in Brief
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Page 2 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

same manner as other taxpayers’ accounts. In the event that such nonfilers

are found to be delinquent, they also become subject to public disclosure.

The five public disclosure programs differ in regard to their legal authority

and operations. Like the federal government, the four states and the

District of Columbia have tax provisions that protect the confidentiality of

taxpayer information. Two states—Connecticut and Illinois—and the

District have enacted legislation providing explicit statutory authority for

their programs, notwithstanding confidentiality safeguards. The two other

states—Montana and New Jersey—have not. Officials from these two

states said that they do not need additional statutory authority to

implement public disclosure because a tax delinquency is a matter of

public record after certain legal action has been taken, such as filing a

certification of debt in superior court, which is entered into a judgment

docket. The programs also operate differently, varying as to the

procedures leading up to disclosure, the media through which disclosure is

made, the type of information disclosed, and how often that information is

updated.

Revenue office officials from the four states and the District of Columbia

believe that their programs have improved or will improve compliance.

However, officials are unable to isolate the gain in revenue collections

directly attributable to their programs. As they explained, public disclosure

is one of many tools that revenue offices use to gain compliance. Some

revenue office officials also noted that factors outside the control of their

offices—notably, the economy—affect compliance.

Like the Internal Revenue Service, state and local revenue offices have

authority to collect taxes from taxpayers that they believe have not paid

the taxes they owe, including taxpayers that are delinquent or have not

filed their returns. The collection process followed by most revenue offices

is phased and generally begins with an assessment of taxes owed.

Thereafter, the office has a number of collection tools it can use to obtain

compliance, including mailing notices to inform the taxpayer of the taxes

that have been assessed and the procedures available for resolving the

delinquency.

In the case of taxpayers that do not respond, the revenue office also has

other tools at its disposal. These include telephone calls and in-person

visits, the placement of a lien on the taxpayer’s property, levying the

taxpayer’s bank accounts, and ultimately the seizure and sale of the

taxpayer’s property. To resolve delinquencies not resolved using

traditional collection tools, revenue offices have experimented with other

Background
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less traditional tools, including public disclosure programs as defined in

this report.

To accomplish our three objectives, we used a combination of surveys and

interviews with state and local revenue office officials. Initially, to

determine which state and local governments are operating public

disclosure programs, we developed a short survey and sent it to all 50

states. We asked officials from revenue offices in each state whether they

had such a program or knew of any local governments operating a

disclosure program in their state. Because these officials identified no

local governments with public disclosure programs, we used the 1998 State

Tax Guide to identify cities and counties that had a local personal or

corporate income tax, and thus potentially might be operating a program.

As agreed with the Committee, we used this information to select no more

than five cities and five counties per state, using population size—starting

with the largest—as our criterion. The group included 24 cities and 8

counties in 12 states and the District of Columbia.2

Appendix II provides a list of the cities and counties we surveyed. We then

sent surveys, which were virtually identical to the ones sent to states, to

these governments. The response rate for surveys of states, cities, and

counties was 100 percent.

To determine the differences among the programs and the views of state

and local officials on whether the programs are improving compliance, we

conducted structured interviews by phone or in-person with officials from

revenue offices in the jurisdictions that reported having public disclosure

programs. To provide the most complete information possible, we also

interviewed officials from jurisdictions reporting that they had

discontinued or were planning to adopt a program.

We did not verify the survey responses provided by the state and local

revenue offices. The results of our survey of cities and counties may not be

representative because we used a judgmental sample, focusing on the

largest cities and counties. Also, as requested by the committee, we are not

making any recommendations in this report.

 

2

We eliminated cities and counties, such as Baltimore, Maryland, that had a piggyback tax, i.e., income

tax collected by the state and distributed to local governments. We also eliminated cities and counties

that have authority to levy an income tax but did not, including cities and counties in Arkansas,

Georgia, and Virginia.

Scope and

Methodology
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We requested and received comments on the descriptions of each state

and the District of Columbia’s disclosure program from cognizant revenue

office officials, and we incorporated their comments where appropriate.

We did our review from March 1999 to July 1999 in accordance with

generally accepted government auditing standards.

As of June 1999, only four states—Connecticut, Illinois, Montana, and New

Jersey—and the District of Columbia had programs operating to publicly

disclose the names and other information about individuals or businesses

that were delinquent in paying income taxes. All of the programs are

relatively new. Connecticut’s program, the first to be implemented, began

disclosing on the Internet in January 1997. The District of Columbia,

Montana, New Jersey, and Illinois programs began disclosing on the

Internet in October 1997,April 1998, May 1999, and September 1999,

respectively.3

 None of the other state and local governments we surveyed

had a public disclosure program.

None of the programs publicly disclose the names of taxpayers that fail to

file their required tax returns. Instead, revenue office employees assess

nonfilers the taxes they owe and process their accounts in the same

manner as delinquent taxpayers should the nonfilers be determined to owe

taxes. Generally, revenue office employees in the four states and the

District of Columbia compare federal and state income tax returns to

identify individuals that did not file their state income tax return. Identified

individuals are then to be assessed an estimated amount and notified

through traditional billing and collections procedures. Should the

individual then fail to pay or resolve the assessment, the account is to be

processed in the same manner as a delinquent taxpayer’s account, which

ultimately may include public disclosure.

In response to our survey, officials from Wisconsin and Minnesota

reported that public disclosure programs were either being developed or

considered. All of the states and the District of Columbia that have or are

planning programs told us that they used Connecticut’s program as a

 

3

The dates shown are when the governments began or planned to begin using the Internet or press

releases to proactively disclose the names of delinquent taxpayers. Connecticut had begun preparing a

list of delinquent taxpayers beginning in September 1996, which was open for public inspection at the

revenue office.

Public Disclosure

Programs Are in Four

States and the District

of Columbia
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model. Also, Connecticut’s tax commissioner told us that 24 other states

and five cities had requested information about the state’s program.4

Officials from North Dakota reported that in September 1995, the state’s

Department of Revenue published a list of approximately 4,000 taxpayers

with unsatisfied liens dating back to 1982. However, they said that this

effort was discontinued in January 1997 because of publicity about its

many errors, such as including taxpayers that had resolved their liens.

Also, North Dakota’s newly elected commissioner told us he believed that

the disclosure unnecessarily embarrassed taxpayers.

Three of the programs we identified are operating under explicit statutory

authority, and two are not. Connecticut, Illinois and the District of

Columbia have statutes that explicitly authorize public disclosure of

delinquent taxpayers. Connecticut’s statute requires tax officials to

maintain, and make available for public inspection, a list of delinquent

taxpayers. Illinois’ statute explicitly states that tax officials may disclose

taxpayers that are delinquent in the payment of tax liabilities. Similarly, the

District of Columbia’s statute grants authority for tax officials to publicly

disclose delinquent taxpayers.

New Jersey and Montana do not operate their programs under specific

statutory authority. Like the other three jurisdictions, New Jersey and

Montana have statutes designed to safeguard the confidentiality of

taxpayer information.

For example, New Jersey’s confidentiality statute explicitly provides that

taxpayer records and files shall be confidential and may not be disclosed.

However, according to state officials, another provision allows tax officials

to file a certificate of debt in superior court against a taxpayer, which is

entered into the judgment docket, thereby making the delinquency a

matter of public record. Since the certificate of debt is a public record,

revenue office officials said that they have the necessary authority to

publicly disclose the information included therein with regard to

delinquent taxpayers.

Montana’s confidentiality statutes also prohibit the disclosure of taxpayer

information. Montana officials told us that another provision provides that

after a warrant is filed with the clerk of the district court and included in

 

4

These states were Arizona, California, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan,

Nebraska, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island,

South Carolina, South Dakota, Utah, Virginia, Washington, West Virginia, and Wyoming. The cities were

Birmingham, AL; Boston, MA; Juneau, AK; Milwaukee, WI; and New York, NY.

Programs’ Legal

Authority and

Operations Differ
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Page 6 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

the judgment docket, the information becomes a matter of public record

and subject to public disclosure on the Internet, newspapers, or any other

medium the state may choose.

The programs also operate differently. As shown in table 1, they differ with

respect to the procedures leading up to disclosure, the media through

which the disclosure is made, the type of information disclosed, and the

frequency with which information is updated.

As table I also shows, four of the programs include provisions to send

letters to delinquent taxpayers, warning them of impending disclosure if

they do not resolve their delinquency.5

 Additionally, the length of time to

respond to the warning varies from 10 business days to 60 calendar days;

all 5 governments use the Internet, while 3 also use press releases to

disclose delinquent taxpayers; the number of taxpayers listed varies from

50 to all that qualify, and the frequency of updates varies from monthly to

periodically, as new information becomes available.

Programs

Program procedure Connecticut

District of

Columbia Illinois Montana New Jersey

Warning letter of impending disclosure sent Yes Yes Yes No Yes

Days for taxpayers to respond to warning 10 (business) 30 (calendar) 60 (calendar) Not applicable 14 (business)

Medium of disclosure Internet, press

release and

newspaper

Internet Internet and

press release

Internet and

press release

Internet

Number of taxpayers disclosed on delinquency list 100 All that qualify All that qualify 50 200

Disclosure of mailing address Yes No Yes No No

Disclosure of court docket number No No No No Yes

Disclosure of type of tax Yes No Yes Yes No

Disclosure of year(s) of tax liability No No Yes No Yes

Frequency of update of delinquency list Monthly Periodically Periodically Monthly Monthly

Source: GAO surveys and structured interviews of state and local revenue office officials.

 5

The programs provide that taxpayers can resolve their delinquencies by paying in full or negotiating

payment agreements. Taxpayers may also provide evidence that the liability is an error or demonstrate

that bankruptcy procedures are in process.

Table 1: Differences in Program Operations
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Revenue office officials believe that their public disclosure programs

improve compliance. They base their views mostly on anecdotal evidence

from statistics on accounts receivable and collections. Montana reported

that as of June 1999, numerous accounts receivable had been resolved

since the program’s inception in April 1998. Specifically, Montana said that

18 payment plans had been set up, 23 accounts had been paid in full, and

23 taxpayers had filed their returns. During this time, approximately 150

taxpayers had been disclosed on the Internet. The District of Columbia

reported that as of June 1999, it had collected $669,912 from seven

taxpayers after they had received warning letters that their names would

be disclosed on the Internet. As of June 1999, approximately 150 warning

letters had been sent to delinquent taxpayers. Additionally, revenue office

officials from Connecticut and the District of Columbia added that they

believe public disclosure had a salutary effect on voluntary compliance.

However, the state and District revenue office officials recognized that

such statistics were not good indicators of program impact because they

do not isolate the effect of public disclosure on accounts receivable and

collections. As they explained, public disclosure is one of many tools that

revenue offices use to gain compliance. For example, Montana officials

noted that at about the same time the first list of delinquent taxpayers was

published on the Internet, the state implemented an automatic phone

system (the predictive dialer), which enabled collectors to contact a

significantly greater number of taxpayers than they were previously able to

contact. The collectors were able to contact more taxpayers because the

automated phone system makes multiple calls, screening out nonreponses,

busy signals, and answering machines, and then directs calls that are

answered by the taxpayer to available collectors.

While District of Columbia officials were able to identify payments from

taxpayers that had been warned that their names would be published on

the Internet if they did not resolve their tax liabilities, they recognized that

other factors could have influenced the taxpayers’ decision to pay.

None of the revenue offices had undertaken a thorough evaluation of their

program. Such an evaluation would be expensive and, as our prior work

has shown, isolating the impact of such programs would be difficult.6

Moreover, revenue office officials from New Jersey and Connecticut said

that factors outside of tax administration—notably, the economy—also

affect compliance.

 

6

Budget Process: Issues Concerning the 1990 Reconciliation Act (GAO/AIMD-95-3, Oct. 1994).

Revenue Office

Officials Believe Their

Public Disclosure

Programs Improve

Compliance
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We are sending copies of this report to Representative Charles B. Rangel,

Ranking Minority Member, Joint Committee on Taxation, and Senator

Daniel P. Moynihan, Ranking Minority Member, Senate Committee on

Finance. We are also sending copies to the Honorable Lawrence H.

Summers, Secretary of the Treasury; the Honorable Charles O. Rossotti,

Commissioner of Internal Revenue; and the Honorable Jacob Lew,

Director, Office of Management and Budget; and other interested parties.

We will also send copies to those who request them.

If you or your staff have any questions concerning this report, please

contact me at (202) 512-9110 or A. Carl Harris, Assistant Director, at (404)

679-1900. Other major contributors to this report are acknowledged in

appendix III.

Margaret T. Wrightson

Associate Director, Tax Policy and

Administration Issues
Page 9 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers
Page 10 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Contents

1 Letter

12

Connecticut 12

District of Columbia 13

Illinois 15

Montana 16

New Jersey 18

Appendix I

Profiles of State and

Local Governments

With Public Disclosure

Programs

Appendix II 20

Cities and Counties We

Surveyed

Appendix III 21

GAO Contacts and

Staff

Acknowledgments

Table 1: Differences in Program Operations 6 Tables
Page 11 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers
Appendix I

Profiles of State and Local Governments With

Public Disclosure Programs

Page 12 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

In this appendix, we describe each of the five public disclosure programs.

All the information provided in this appendix was reported by state and

local revenue office officials. Other than clarifying this information with

the appropriate officials, we did not attempt to validate its accuracy.

In January 1997, the Connecticut Department of Revenue Services began

publicly disclosing on the Internet (http://www.state.ct.us/drs/delinq/

mart100.html), newspapers, and press releases, the names of Connecticut’s

top 100 delinquent taxpayers, including businesses and individuals.

In 1986, section 12-7a of the Connecticut Tax Code was amended to

require the tax commissioner to prepare a list of delinquent taxpayers and

make it available for public inspection.

Revenue office officials told us that the public disclosure program was

initiated as a means of applying “social” pressure to encourage people to

pay the taxes they owe.

Certified letters, return receipt requested, are sent each month to the top

200 delinquent taxpayers (those with the largest accounts that were

delinquent for more than 90 days), warning them of impending disclosure

on the Internet if they do not resolve their delinquencies within 10

business days. Meanwhile, officials screen the list for taxpayers whose

names should not be published.1

 When 10 days have elapsed, officials have

5 days to finalize and narrow the list to the top 100. The information

disclosed includes the taxpayer’s name, address, amount owed (including

penalties and interest), and type of tax owed. It is updated monthly.

Disclosure is discontinued for any of the following reasons:

• taxpayer pays, negotiates a payment agreement, or otherwise resolves the

account;

• taxpayer’s account has appeared on the Web site for 3 or more consecutive

months, and the revenue office has verified that:

• certified letters have been undeliverable for 3 consecutive months,

but not “refused” by the addressee or

• the account is not collectible for statutory or regulation-based

reasons; or

 

1

Officials screen taxpayers’ names for those who may have voluntarily paid or are in the process of

resolving their delinquency, yet such transactions are not yet in the computer system.

Connecticut

Legal Authority

Impetus

Operating Procedures
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 13 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

• taxpayer’s account has appeared on the Web site for 4-6 consecutive

months, and revenue officials have verified that bankruptcy proceedings

have occurred.

Nonfilers can be included on the list after an assessment is made and the

account becomes delinquent. Their accounts are then processed in the

same manner as other delinquent accounts and are not identified as

nonfilers.

Revenue office officials reported that they have not had any inaccurate

disclosures, complaints from taxpayers, or opposition from taxpayers or

interest groups.

Revenue office officials told us that since the program’s inception, the

revenue office had collected $52 million in overdue tax revenues and

entered payment agreements totaling $12 million. Revenue office officials

said that they could not determine the extent to which public disclosure

affected collections because other collection tools could have influenced

taxpayers’ decisions to pay. Revenue office officials also stated that factors

outside the control of their offices, such as the economy, also affect

compliance.

Revenue office officials reported that they use several tools to gain

compliance, such as letters, liens, levies, and seizures. Additionally,

Connecticut has used other tools, such as a Tax Amnesty Program, a

Voluntary Disclosure Program, and the Nexus Project.2

In October 1997, the District of Columbia’s Office of Tax and Revenue

began publicly disclosing on the Internet (http://www.dccfo.com/

TAXPAYER2.htm) the names of selected uncooperative delinquent

taxpayers, including businesses and individuals, who owe more than

$10,000.3

In 1947, section 47-1805.4 of the District of Columbia Code was enacted,

granting the District authority to disclose delinquent taxpayers.

 

2

The Tax Amnesty Program allowed nonfilers to come forth and pay their taxes without penalty. The

Voluntary Disclosure Project offers noncompliant taxpayers favorable terms to pay their back taxes.

The Nexus Project is an effort to identify and collect the taxes owed by nonresident taxpayers.

3

In May 1999, 94 taxpayers were listed. This represented all delinquent taxpayers that had been

processed to disclosure. The list included two taxpayers who owed less than $10,000, $9,743.48 and

$9,749.69, respectively.

Problems/Complaints

Effect on Compliance

Other Tools for Improving

Compliance

District of Columbia

Legal Authority
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 14 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Revenue office officials told us that the public disclosure program was

initiated as another tool to encourage taxpayers to pay the taxes they owe.

They also told us that they were impressed with Connecticut’s public

disclosure program.

When an account is delinquent for at least 90 days, a certified letter is sent,

warning the taxpayer that failure to work with the Office of Tax and

Revenue within 30 days to resolve the delinquency could result in public

disclosure. After the disclosure, a copy of the Internet screen is mailed to

the delinquent taxpayer. The information disclosed includes the taxpayer’s

name (including the responsible officer(s) for businesses) and the amount

owed. The delinquency list is updated periodically as new information

becomes available.

Disclosure is not made (or discontinued if already made) for any of the

following reasons:

• taxpayer makes payment arrangements,

• revenue office determines that a mistake was made in calculating the tax,

• taxpayer enters bankruptcy proceedings, or

• taxpayer provides evidence that he is not the responsible officer of a

business.

Nonfilers can be included on the list after an assessment is made and their

accounts become delinquent. Their accounts are then processed in the

same manner as other delinquent accounts and are not identified as

nonfilers.

Additionally, the Office of Tax and Revenue publishes a separate list on the

Internet of taxpayers it is unable to locate after exhaustive investigation.

The public is invited to advise the Office of Tax and Revenue of the

whereabouts of these taxpayers.

Revenue office officials told us that they have not conducted an overall

evaluation of their disclosure program because of staff limitations. They

told us that in fiscal year 1999,4

 the revenue office collected $669,912 after

sending warning letters and $70,587 after disclosure on the Internet.

However, revenue office officials recognized that other factors could have

influenced the taxpayers’ decisions to pay.

 

4

As of June 1999.

Impetus

Operating Procedures

Effect on Compliance
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 15 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Revenue office officials reported that they were aware of only one instance

where inaccurate information was disclosed on their Web site. In this case,

an individual was inappropriately identified as the responsible officer of a

business. After providing information proving that he was not the

responsible officer, the revenue office corrected the mistake. Officials said

that they had not received any complaints about the public disclosure

program or any opposition from interest groups.

The disclosure program is one of many tools the District uses to improve

compliance and collect unpaid taxes. Other tools include telephone

contacts, letters, liens, and seizures.

In September 1999, the Illinois Department of Revenue plans to disclose on

the Internet (http://www.revenue.state.il.us/) and through press releases,

the names of all delinquent taxpayers, including businesses and

individuals, who have final liabilities greater than $10,000 for longer than a

period of 6 months.

Section 39b54 of the Illinois Civil Administration Code, enacted in August

1998, with an effective date of January 1999, provides Illinois’ authority for

its public disclosure program.

Revenue office officials told us that the public disclosure program was

initiated to decrease the amount of accounts receivable. The revenue

office was also influenced by Connecticut’s public disclosure program.

Certified letters are sent to those taxpayers with delinquent accounts of at

least 6 months, warning them that their names will be published on the

Internet if they do not make payment arrangements or resolve their

accounts. Taxpayers have 60 days to respond. The information to be

disclosed includes the taxpayer’s name; amount owed; mailing address;

type of tax owed; tax period; and for corporations, the president’s name.

While the legislation stipulates an annual list, the program administrator

said that names will be removed periodically, as accounts are paid, and

that new names will be placed on the list only once a year.

Disclosure may be discontinued for any of the following reasons:

• account is paid in full,

• payment arrangements are made,

• old payment agreements are brought into compliance, or

• legal proceedings (i.e., administrative hearings, civil court, or bankruptcy)

are under way.

Problems/Complaints

Other Tools for Improving

Compliance

Illinois

Legal Authority

Impetus

Operating Procedures
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 16 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Nonfilers can be included on the list after an assessment is made and their

accounts become delinquent. Their accounts are then processed in the

same manner as other delinquent accounts and are not identified as

nonfilers.

Revenue office officials told us that it is too early to determine the full

impact of the program. However, they reported that after sending warning

letters to 5,200 delinquent taxpayers since March 1999, $2.9 million had

been collected, $918,000 in payment agreements had been made, and

$453,000 in accounts receivable were resolved (i.e., the taxpayer

demonstrated that amount was not owed).5

Revenue office officials reported that they have not had any opposition

from interest groups. They have received some letters of complaint from

businesses with the same or similar names as delinquent taxpayers.

Revenue office officials reported that they use other tools to gain

compliance, such as letters, liens, levies, and seizures. Other tools include

denying the issuance or renewal of licenses and utilizing private collection

agencies.

In April 1998, the Montana Department of Revenue began publicly

disclosing on the Internet (http://www.state.mt.us/revenue/del._tax_

accts.html) and through press releases, the names of Montana’s top 50

delinquent taxpayer accounts, including businesses and individuals.

Montana does not have a statute that specifically addresses public

disclosure. However, according to Montana officials, section 15-1-704 of

Montana’s Tax Code allows the department of revenue to file a warrant

with the district court to be included in the judgment docket, which makes

the delinquency a matter of public record.

The public disclosure program was initiated in an effort to improve

compliance. Also, revenue office officials told us that they were impressed

by Connecticut’s public disclosure program.

If taxpayers do not pay their taxes within 30 days of the due date, the

Department of Revenue notifies the delinquent taxpayer, either by

telephone or mail, that unless payment is received within 30 days of the

date of the notice, a warrant of distraint may be issued and filed in the

district court. The filing of warrants with the clerk of the district court to

 

5

As of May 21, 1999.

Effect on Compliance

Problems/Complaints

Other Tools for Improving

Compliance

Montana

Legal Authority

Impetus

Operating Procedures
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 17 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

be included in its judgment docket is the basis of Montana’s disclosure

program; as such, legal action renders a delinquency a matter of public

record. The information disclosed includes the taxpayer’s name, city and

state of residence, tax type, and amount owed. The information is to be

updated monthly.6

Public disclosure is discontinued for any of the following reasons:

• payment plan is established,

• return is filed,

• revenue office accepts an offer-in-compromise,

• taxpayer files for bankruptcy, or

• taxpayer is on the list for 6 months.

Nonfilers can be included on the list after an assessment is made and their

accounts become delinquent. Their accounts are then processed in the

same manner as other delinquent accounts and are not identified as

nonfilers.

Since the program’s inception, revenue office officials reported that as of

June 1999,

• 23 taxpayers paid in full,

• 18 negotiated payment plans,

• 23 filed outstanding returns, and

• 2 filed amended returns.

The revenue office officials told us that they had collected $367,839 as a

result of these actions. They recognized that other factors may have

contributed to the taxpayers’ decisions to pay or resolve their

delinquencies. For example, Montana officials noted that at about the

same time the first list of delinquent taxpayers was published on the

Internet, the state implemented an automatic phone system (the predictive

dialer), which enabled collectors to contact a significantly greater number

of taxpayers.

Revenue office officials stated that in one instance, inaccurate information

was disclosed on the Internet. In that case, the amount of taxes owed was

overstated because the tax rate was applied incorrectly. The state has

received few complaints from taxpayers and no opposition from interest

 

6

The March 1999 listing had not been updated as of July 15, 1999. According to the program

administrator, failure to update the Internet listing was an oversight.

Effect on Compliance

Problems/Complaints
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 18 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

groups. One local attorney tried to organize citizens in opposition to the

Internet program, but he was unable to gain much support, according to

revenue office officials.

Revenue office officials reported that they use other tools to gain

compliance, including telephone contacts, letters, warrants of distraint

(liens), levies, and offers-in-compromise.

In May 1999, the New Jersey Division of Taxation began publicly disclosing

on the Internet (http://www.state.nj.us/treasury/taxation/jdgdiscl.htm), the

names of New Jersey’s 100 businesses and 100 individuals that owe the

most.

New Jersey does not have a provision that expressly authorizes a public

disclosure program. According to New Jersey officials, the filing of a

certificate of debt under section 54:49-12 forms the basis of New Jersey’s

public disclosure program. When the clerk files the certificate in the

judgment docket, the information contained therein becomes public

record.

Revenue office officials told us that the public disclosure program was

initiated in an effort to collect outstanding tax liabilities. Also, they were

influenced by the reported success of Connecticut’s public disclosure

program.

The public disclosure program is not initiated until after standard

collection tools are used, including sending the taxpayers a statement of

account, bill, notice of assessment, and a letter warning that failure to

resolve their delinquency in 30 or 90 days7

will result in the filing of a

certificate of debt. After the certificate of debt is filed, taxpayers may be

subject to actions, such as levy, seizure, and/or referral to the Attorney

General. Finally, delinquent taxpayers are warned, through certified mail,

that failure to resolve their delinquency within 14 days may result in the

disclosure of their certificate of debt information on the Internet. The 100

individuals and 100 businesses that owe the most are disclosed. The

information disclosed includes the taxpayer’s name; trade name (if a

business); city; date and amount of the certificate of debt; and the court

docket number. The information is updated monthly.

 

7

Businesses are given 30 days, while individuals are given 90.

Other Tools for Improving

Compliance

New Jersey

Legal Authority

Impetus

Operating Procedures
Appendix I

Profiles of State and Local Governments With Public Disclosure Programs

Page 19 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Disclosure is discontinued if the taxpayer

• shows proof of bankruptcy proceedings,

• enters into a deferred payment arrangement or closing agreement, or

• pays all tax liabilities.

Also, taxpayers that have not paid outstanding liabilities or entered into a

deferred payment arrangement or closing agreement may be removed to

make room for the posting of new names. Such taxpayers may be reposted at any time until the delinquencies are resolved.

Nonfilers can be included on the list after an estimated assessment is made

and a certificate of debt is filed. Their accounts are then processed in the

same manner as other delinquent accounts and are not identified as

nonfilers.

A revenue office official told us $695,991 had been collected as of July 27,

1999. However, he also stated that it is too soon to quantify the full effects

of the program.

Officials reported that they had received no complaints from taxpayers or

opposition from interest groups.

Revenue office officials told us that the disclosure program is only one of

many tools the state uses to improve compliance and collect unpaid taxes.

Other tools include project letters, field investigations, certificates of debt,

levies, seizures, and office and field audit programs. The revenue office has

also used private collection agencies and a special project group that

focuses upon noncompliants in the cash economy, as less traditional tools.

Effect on Compliance

Problems/Complaints

Other Tools for Improving

Compliance
Appendix II

Cities and Counties We Surveyed

Page 20 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

State City County

Alabama Birmingham

California Los Angeles

San Francisco

District of Columbia

Delaware Wilmington

Allen

Elkhart

Marion

St. Joseph

Indiana

Vanderburgh

Kentucky Lexington

Louisville

Fayettte

Jefferson

Detroit

Flint

Grand Rapids

Pontiac

Michigan

Warren

Missouri Kansas City

St. Louis

New Jersey Newark

New York New York

Yonkers

Akron

Cincinnati

Cleveland

Columbus

Ohio

Toledo

Oregon Portland

Multnomah

Pennsylvania Philadelphia

Pittsburgh
Appendix III

GAO Contacts and Staff Acknowledgments

Page 21 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers

Margaret T. Wrightson (202) 512-9110

A. Carl Harris (404) 679-1900

In addition to those named above, Catherine Myrick, Lisa Moore, Stuart

Kaufman, and Shirley Jones made key contributions to this report.

GAO Contacts

Acknowledgments
Page 22 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers
Page 23 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers
Page 24 GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers
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